1. M ODELING SREC M ARKETS Will Harrel

2. MA S YSTEM O VERVIEW For every MWh of solar photovoltaic (PV) energy produced, 1 Solar Renewable Energy Credit (SREC) is created These SRECs are sold from the solar generators to load-serving entities (LSEs), who must purchase a certain number of SRECs If an LSE does not meet its requirement, it must pay the ACP ◦ The ACP is currently $600 per SREC ◦ This acts as a price ceiling for SRECs Excess unsold SRECs can be sold to MA government ◦ $300 per SREC with a 5% fee ◦ This acts as a price floor

3. MA S YSTEM O VERVIEW ( CONTINUED ) The total requirement for the next year is set using a formula ◦ Initially 30 MW ≈ 34,000 SRECs The requirement for an individual LSE is proportional to its market share

4. G OAL : F IND THE F ORWARD P RICE C URVE The forward price curve is based on two categories ◦ Decisions made by agents  LSEs  Generators ◦ Randomness in the system  Decision profiles of other generators  Costs, electricity price, future ACP, and more

5. H OW D O W E A CCOMPLISH T HIS ? Multi-agent stochastic simulation Simulation run 100’s of times ◦ Agents “learn” from outcomes in previous runs Find averages and spreads ◦ Price and Capacity

6. ≥50% at ACP, ≥25% at price floor ≥50% at price floor R ESULTS —L OTS OF U NCERTAINTY

7. T RADITIONAL ACP

8. V ARIABLE ACP

9. T RADITIONAL ACP ≥50% at ACP, ≥25% at price floor ≥50% at price floor

10. V ARIABLE ACP